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Mold Suit Pays Damages of $25M

Nov 26, 2003 | Miami Herald

The owner of a luxury Bal Harbour apartment complex expects to pay millions of dollars to settle a class-action lawsuit that claimed the tower was infested with mold.

Under the settlement, Archstone-Smith will reimburse tenants for medical bills and property damage allegedly linked to a mold outbreak last year at Harbor House South, where units rent for about $1,500 a month. Plaintiff lawyers say about 800 families or groups of roommates are already identified as potential plaintiffs, meaning thousands of people could ultimately join the suit.

The exact scope and cost of the settlement remains in doubt, though in a September regulatory filing Archstone-Smith said it estimated the suit and settlement and related repairs would cost $25 million. That comes on top of a $38 million tab for ridding the 452-unit tower of mold a total that the company says included repairs planned before the mold problems arose last year, as well as about $12 million relocating tenants and replacing their damaged furniture and clothing.

In a statement released Tuesday, Archstone-Smith said it thinks it would have won the suit, but decided to settle ``given the unusual circumstances . . . unique to Harbor House South.''

The resolution of the case in Miami-Dade County Circuit Court marks one of the first settlements of a class-action mold suit against the owner of a privately-held building.

Mold suits have emerged as one of the fastest-growing sectors in liability law, a phenomenon builders and insurers blame largely on opportunistic attorneys. Lawyers counter mold problems are real, and often caused by either shoddy construction or lax maintenance.

Either way, the insurance industry says the rising number of mold claims threaten its ability to back homeowner policies, particularly in humid Florida, where mold is a chronic nuisance.

An Archstone-Smith spokesman said Tuesday the company hoped to recover a ''significant'' portion of the settlement costs from its insurance carriers.

Archstone-Smith, a publicly-held company and the country's largest apartment owner, said it moved quickly to fix the mold contamination once it discovered the problem in the summer of 2002. But plaintiffs say mold was an issue from the time the Englewood, Colo.-based company bought the building at 10275 Collins Ave. in November 2000, and that the lawsuit forced Archstone-Smith into action.

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